Everything You Need To Know About Freddie Mac
- By Sam Khalil
- Published 01/7/2012
- Buying
- Unrated
Freddie Mac is a publicly owned enterprise that is sponsored by the government. Technically, although it is known as Freddie Mac, it is actually The Federal Home Loan Mortgage Corporation. The objective behind Freddie Mac was to increase the secondary mortgage market which in effect helped to increase the amount of money available to be borrowed for mortgages.
What Freddie Mac does in essence is purchase mortgages in the secondary market, puts them together into a pool and then proceeds to offer them to investors on the open market as mortgage backed securities. It at this point begins to get a little more complex, especially as you delve into the world of securitization, suffice is to say that it boils down to government backing.
When Freddie Mac was set up in 1970 the core objective was to ensure liquidity in the housing markets throughout the US. Its precise goal was to maintain this liquidity in good and bad economic times. As we now know this faltered during 2008 and in 2009 it was placed into conservatorship by the government. Due to this turn of events it received a vast amount of government financing with the goal of maintaining its role and to assist in the housing recovery.
So where does Freddie Mac fit into the picture when it comes to the average person on the street looking to buy a house and acquire a mortgage? As mentioned Freddie Mac does not deal directly with the consumer although they do help borrowers who are currently in trouble staying in their homes.
They are now along with Fannie Mae funding the vast majority of the residential loans in the US. They are also overseeing the loan process to ensure that those acquiring mortgages can afford them, therefore increasing the quality of the credit being extended. They are also actively involved with keeping those who are currently delinquent on their mortgages in their homes. They do so by providing information on alternatives and also by extending assistance through the "Making Homes Affordable Program" that was created by the current administration.
Essentially they supply information to borrowers on options for refinancing. They provide a list of lenders state by state who are participating in HARP. Of course no situation is created equal and certain lenders may have different requirements, however with that said there are other options that they provide. Freddie Mac also provides financing for renters and in less well off communities they assist those with moderate to low income purchase affordable housing.
What Freddie Mac does in essence is purchase mortgages in the secondary market, puts them together into a pool and then proceeds to offer them to investors on the open market as mortgage backed securities. It at this point begins to get a little more complex, especially as you delve into the world of securitization, suffice is to say that it boils down to government backing.
When Freddie Mac was set up in 1970 the core objective was to ensure liquidity in the housing markets throughout the US. Its precise goal was to maintain this liquidity in good and bad economic times. As we now know this faltered during 2008 and in 2009 it was placed into conservatorship by the government. Due to this turn of events it received a vast amount of government financing with the goal of maintaining its role and to assist in the housing recovery.
They are now along with Fannie Mae funding the vast majority of the residential loans in the US. They are also overseeing the loan process to ensure that those acquiring mortgages can afford them, therefore increasing the quality of the credit being extended. They are also actively involved with keeping those who are currently delinquent on their mortgages in their homes. They do so by providing information on alternatives and also by extending assistance through the "Making Homes Affordable Program" that was created by the current administration.
Essentially they supply information to borrowers on options for refinancing. They provide a list of lenders state by state who are participating in HARP. Of course no situation is created equal and certain lenders may have different requirements, however with that said there are other options that they provide. Freddie Mac also provides financing for renters and in less well off communities they assist those with moderate to low income purchase affordable housing.
Sam Khalil
First Alliance Home Mortgage is New Jersey's premier Mortgage Banker/Broker. Their experienced Loan Officers provide clients with the latest information on special government programs, equity acceleration, and how to choose the type of loan that best suits their needs. Visit http://www.fahmloans.com/ or call 732-582-3338
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